Health Policy Report

The Week in Review

The highlight of the week came on Tuesday when President Trump outlined his legislative agenda in his first remarks to a joint session of Congress. In a generally well-received speech, the President called for a trillion-dollar infrastructure plan, paid family leave, and providing tax credits to help Americans purchase health insurance. Those policies have divided Republicans in the past, and it remains to be seen whether a presidential endorsement can help unwind the logjam on Capitol Hill.

Floor action last week mirrored the pattern that lawmakers have set out since the beginning of the 115^th Congress, with the Senate working through confirmation votes for President Trump’s Cabinet and the House considering a set of bills and resolutions designed to roll back the regulatory legacy of the Obama Administration. The specific measures passed by the House last week – all largely along party lines – would require federal agencies to repeal existing regulations in order to offset the cost of any newly finalized rules, as well as create a new “Retrospective Regulatory Review Commission” to recommend further regulatory repeals (H.R. 998); prevent federal agencies from using social media and other communications methods in order to attract public support for agency actions (H.R. 1004); and bar federal agencies from issuing any significant new rules without receiving input – including cost-benefit analyses – from the White House’s Office of Information and Regulatory Affairs (OIRA) (H.R. 1009).

In the Senate, confirmation votes were held for a series of now-installed Cabinet officials, namely Wilbur Ross at Commerce, Ryan Zinke at Interior, Ben Carson at Housing and Urban Development, and Rick Perry at Energy. The batch of four nominees has cleared the queue on the Senate floor, although Secretary of Agriculture nominee Sonny Perdue and Secretary of Labor nominee Alexander Acosta remain unconfirmed and have not yet been scheduled for a confirmation hearing in their respective committees of jurisdiction.

House Speaker Paul Ryan reiterated last week that the House, Senate, and White House remain committed and on-schedule in their efforts to repeal and replace the Affordable Care Act. However, Republicans on the House Energy and Commerce Committee have kept the most recent version of their replacement secret, with Sen. Rand Paul (R-KY) and a large group of Democrats unsuccessfully searching the Capitol on Thursday in search of the text. Portions of the plan have leaked and our breakdown on the very latest details is in the roundup below.

The Week Ahead

A defense appropriations bill (H.R. 1301) for the remainder of the fiscal 2017 year will hit the House floor once it convenes tomorrow, providing for $583.7 billion in annualized defense spending. With an Apr. 28 funding deadline looming for the entire government, watch to see if Democrats attempt to hold up the defense bill in order to pressure Republicans to act on omnibus legislation that would fund the rest of the government. Republican leaders are currently crafting their spending strategy, which may include multiple “minibus” appropriations measures to fund the various agencies and departments that make up the federal government. Should that strategy fail, it remains possible that lawmakers will pass a final stopgap bill to maintain fiscal 2016 levels of spending for the remainder of the 2017 fiscal year, which ends Sept. 30.

The House will also vote on a trio of tort reform bills designed to limit class action lawsuits and filings. The three measures would: (1) require federal courts to impose penalties on parties that file frivolous claims and repeal a safe-harbor provision that allows such parties to avoid penalties if they withdraw the suit (H.R. 720); (2) allow class action lawsuits to move forward only if all potential members in a class action have suffered similar injuries (H.R. 985); and (3) require additional in-state plaintiffs to show a plausible case in order to keep the matter in state courts (H.R. 725).  

After piling through Cabinet confirmations last week, the Senate will start its week Monday to vote on a House-passed disapproval resolution (H.J. Res. 37) that would rescind a joint rule published by the Department of Defense, General Services Administration, and National Aeronautics and Space Administration (NASA) requiring federal contractors to keep detailed information on their past labor violations. Businesses affected by the rule argue that it serves as a “blacklist” that violates their due process rights – an argument that led to a federal court’s decision to block the rule last October. Per the provisions of the Congressional Review Act (CRA), the measure only needs to be passed by a simple majority in the upper chamber to be advanced to the president’s desk.

On the committee level, Republican lawmakers are hoping to begin marking up the replacement bills for the Affordable Care Act (ACA). Media outlets also reported last week that Speaker Paul Ryan (R-WI) is hoping to get “repeal and replace” legislation to the Senate in the next three weeks.

As GOP Releases ‘Secret’ ACA Replacement, Key Details Emerge

As House Republicans privately consider a “secret” draft of their plan to repeal and replace key provisions of the Affordable Care Act (ACA), several key details have emerged about the draft proposal. The Energy and Commerce Committee will reportedly markup the legislation Wednesday, although it remains possible that could be delayed. A full Congressional Budget Office (CBO) analysis is not expected before the Committee convenes. According to multiple sources, the House GOP’s plan to replace the ACA includes several controversial policies, including advanceable tax credits and a cap on the tax breaks that employers get for providing insurance to their workers. It also includes provisions to let states keep some Medicaid expansion funding. House GOP lawmakers received a briefing on the plan at their conference meeting last Thursday, and the Ways and Means Committee met later to discuss the plan.

The House Energy and Commerce Committee's new bill is being kept in a “dedicated reading room,” where it will be made available to members of the panel ahead of a markup. GOP leaders say the move is an effort to prevent leaks, and plan to release the bill once it is final. Several lawmakers in both parties — including Sen. Rand Paul (R-KY) and House Minority Whip Steny H. Hoyer (D-MD)— attempted at various times to enter a room where the document was reportedly kept, but were turned away. Despite some confusion over the draft, several lawmakers shared some details about the party's current plan, which broadly resembles a Feb. 10 draft that includes advanceable tax credits. Inclusion of the credits has generated criticism from conservatives such as Sen. Paul and House Freedom Caucus Chairman Mark Meadows (R-NC) who believe that the tax credits amount to a new federal entitlement.

House GOP leaders are reportedly eyeing a broad overhaul of the ACA's Medicaid expansion, but possibly allowing enhanced rates to apply going forward for any existing enrollees. Those who leave Medicaid expansion and later get back on the benefit would fall under new, lower funding levels, however. A number of GOP governors chose not to expand Medicaid under the law and have voiced strong concerns about being penalized under the Republican plan for that choice. Republican leaders are also leaning towards capping the tax exclusion that employers get for providing insurance to their workers. While widely opposed by many business groups, the provision is estimated to save $200 billion over 10 years – the main financing mechanism for the package. The draft would also fully repeal the health care law's 40 percent Cadillac tax on high-cost insurance.

Senate Dems Release Bill Allowing Drug Imports from Canada

Last Tuesday, a group of Democratic senators introduced a bill that would allow for the importation of low-cost medicines from Canada and other nations. Introduced by Sens. Bernie Sanders (I-VT), Cory Booker (D-NJ) and Bob Casey (D-PA), the measure would instruct HHS Secretary Tom Price to issue regulations allowing pharmacies, drug wholesalers and individuals to import drugs manufactured at facilities inspected by the FDA and sold by agency-certified Canadian sellers. After two years, the HHS Secretary would be authorized to green-light importation from nations that meet U.S. standards. Reps. Elijah Cummings (D-MD) and Lloyd Doggett (D-TX) have introduced a companion bill in the House.

The legislation would not allow the importation of controlled substances, anesthetic drugs inhaled during surgery, or compounded drugs, and sellers would be required to pay a fee to fund the importation program. Medications purchased under the act would have to have the same basic characteristics as the version of the drugs approved in the U.S., and HHS would approve laboratory testing of the imported drugs to ensure their chemical authenticity. Individuals would be prohibited from importing certain types of drugs, including some biologics, that could only be imported by wholesalers or pharmacies. President Trump advocated for the importation of drugs throughout his campaign and has chastised drug makers for their U.S. pricing strategies.

Finance Committee Approves Seema Verma to Lead CMS

The Senate Finance Committee on Thursday approved the nomination of Seema Verma in a 13-to-12 party-line vote to become administrator of the Centers for Medicare & Medicaid Services (CMS). Every Democrat on the committee opposed the nomination, which could come up for a Senate floor vote as early as this week. If confirmed, Verma would play a key role in the Trump Administration's plan to give states more control of their Medicaid programs. Verma would oversee more than $1 trillion in federal spending on Medicare, Medicaid, the Children’s Health Insurance Program and the marketplaces created under the Affordable Care Act.

Republican members of the Senate Finance Committee praised Verma's work in designing the Healthy Indiana Plan (HIP), a consumer-directed Medicaid program that provides Hoosier state beneficiaries with health savings accounts and incentivizes preventative care and healthy behaviors. Verma also helped create a second-generation version of this program, HIP 2.0, which expanded Medicaid coverage under the Affordable Care Act in the state when Vice President Mike Pence was governor. With Pence now vice president, many Republicans point to the program as a national model. Praising Verma's background, Senate Finance Chairman Orrin Hatch (R-UT) said she would be in a key role as Republicans seek to reshape the nation’s health care system. In contrast, many Democratic senators questioned Verma's "readiness to serve in this position” citing her Senate Finance hearing on Feb. 16. Several Democrats on the committee said she answered many questions vaguely, which prevented them from understanding how she might perform as CMS administrator.

Report Highlights Challenges with Medicaid Cap Proposals

According to a new study by Manatt Health, a lack of up-to-date Medicaid data, states’ varied demographics and vast differences in states’ per-capita spending may hinder Congress’ ability to cap Medicaid funding in an equitable way. GOP lawmakers have proposed capping federal Medicaid funding in various health reform blueprints. The new analysis came as lawmakers and state governors met last Monday following the National Governors Association’s winter meeting. Governors, who are crafting their own proposal, met with Republican and Democratic lawmakers in two separate sessions. Governors also met with HHS Secretary Tom Price, where they discussed rolling back Medicaid expansion and capping traditional Medicaid funding. Governors said that during this session Price emphasized that he wants to give states flexibility, yet several Democratic governors said they are concerned pulling back Medicaid expansion and restructuring federal Medicaid funding would lead to vast coverage losses.

Manatt researchers say Congress can’t maintain current levels of coverage while also block granting Medicaid and treating states fairly, noting that expansion dollars currently account for 30 percent of federal funding for expansion states. Calculating a baseline for changes to Medicaid financing is also problematic, due to the lack of current data, Manatt said. The study's authors based their analysis on fiscal 2011 data from Kaiser Family Foundation, and pointed to the significant changes in the health-care landscape since that time. The Manatt report found that fiscal 2011 Medicaid spending varied from $1,656 to $5,214 per child depending on the state, raising questions about the viability of setting a per-person formula at the federal level. Many governors have expressed concerns about this as their demographics change, and the Manatt analysts say shifting demographics can quickly alter state Medicaid budgets.